In truth, I think it particularly angers the fringe left, and the progressive base is just along for the ride and doesn’t want to be painted in a negative light.
I think it runs deeper than that.
The Democrats were slow to come around to gay / lesbian rights. Clinton institutes don't ask / don't tell and signs DOMA into law. Bush largely ignores the issue (and the military starts to follow suit), then Obama runs a campaign where he states he won't touch DOMA. A year or so after taking office, he reverses course and the Democrats suddenly become the champions of LGBQ.
There are many on the Democrat side of the spectrum that feel a bit of guilt that it took until 2009-2012 to support gay rights. And even in Hollywood, which is notoriously progressive / Democrat, you had lines in the 21st century like "paging doctor faggot" (The Hangover) and "you know how I know that you're gay" (40 year old Virgin).
In the early 2010s, "SJWs" start to gain steam using social media as a soap box. Gay jokes disappeared.
Fast forward to today, and transgendered people are lumped in with LGBQ - not because Democrats made it this way, but because of natural social undertones. Ergo, Democrats perceived that anyone sympathetic to gay rights (which, by the way, is ~70% of the population based on polls) is also sympathetic to transgendered rights. Therein lies the critical error - equating a 17 year old 6'0" biological male who wants to play women's soccer with a same-sex couple that wants to get married to get the legal protections afforded to heterosexual couples.
The Democrats also have an issue that their political strategy thinks that every voter bloc will behave like black Americans. Pass a piece of landmark legislation and you get 90%+ of the vote forever. That assumption requires people to ignore a lot of social, cultural, and historical context... but I'd expect nothing less of a party who champions LBJ's legislation despite the fact that he used very racist language to reveal the fact that he had nefarious intentions to increase and consolidate power with it. Didn't quite work out; the Democrats held the Presidency for 4 years between 1969 and 1993... and some of the Republican victories were historic landslides. And I think Obama's fatherly tongue-lashing cost Harris the election... she does, too, since Obama was conspicuously absent from the list of people she thanked for helping her campaign.
Anyway...yes, I agree, this issue affects a very small minority of Americans. But the socio-political undertones explaining why Democrats tilted hard into transgendered rights is much deeper and more complex than that.